Case No: A2/2000/0394
 
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM H.H. JUDGE THOMPSON QC
Royal Courts of Justice
Strand, London, WC2A 2LL

Thursday 21st December 2000

B e f o r e :

LORD JUSTICE KENNEDY
LORD JUSTICE LAWS
and 
LORD JUSTICE RIX
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	Derek Wylie on behalf of SMP Motor Policies at Lloyds		Appellant	
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	Terence Francis Wake	Respondent	

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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
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Dermod O’Brien QC & John Snell (instructed by Lamport Bassitt) for the Appellant
Nicholas Valios QC & David Brock (instructed by Addison Madden) for the Respondent

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Judgment
As Approved by the Court

Crown Copyright ©

Lord Justice Kennedy:
1.	This is the Second Defendant’s appeal from a decision of Judge Anthony Thompson QC, sitting at Southampton County Court, who on 24th March 2000 dismissed an application by the Second Defendant for a declaration “that pursuant to section 152(1)(a) of the Road Traffic Act 1988 no sum is payable by the Second Defendant to the Claimant in respect of any judgment for the Claimant against the First Defendant in these proceedings.”  For present purposes it is convenient to continue to refer to the respondent as the Claimant, and to the appellant as the Second Defendant.
Background
2.	The Claimant was born on 2nd March 1971, so he is now 29 years of age.  On 29th December 1993 he was a rear seat passenger in a motor car which was being driven by the First Defendant westwards along the A30 road in Cornwall.  The First Defendant turned right across the path of an oncoming vehicle, and the result was a collision in which the Claimant sustained serious injuries.  In due course the First Defendant was convicted of driving without due care and attention.
3.	The Claimant instructed solicitors who discovered that although the motor car had been insured by the First Defendant’s mother with the Second Defendant, the First Defendant was an uninsured driver - either because he was not a named driver, or because he was under 25 years of age.  On 26th June 1995 the solicitors wrote a letter of claim to the Second Defendant as the insurer involved “pursuant to section 151 and 152 of the Road Traffic Act 1988”.  In broad terms section 151 requires insurers who have issued a certificate of insurance to meet judgments in respect of liabilities which would have been covered had the vehicle been properly insured as required by law, and section 152 sets out certain exceptions to that statutory extension of liability.  It begins -
"(1) no sum is payable by an insurer under section 151 of this Act - 
(a) in respect of any judgment unless, before or within seven days after the commencement of the proceedings in which the judgment was given, the insurer had notice of the bringing of the proceedings...."
4.	Having received the letter of 26th June 1995 the Second Defendant responded seeking further information, and the matter proceeded normally on the basis that the Second Defendant was the insurer dealing with the claim.  On 7th November 1995 the Second Defendant asked for medical evidence, and on 11th April 1996 the Claimant’s solicitors sent a copy of a preliminary medical report.  On 28th November 1996, about one month before the expiry of the three year period of limitation, the Claimant’s solicitors issued a writ, and on 3rd February 1997 they wrote again to the Second Defendant.  Part of that letter reads -
"We confirm that a Writ has been issued against Mr Page on 28th November 1996.  No doubt you will be wishing to nominate solicitors to accept service and we shall be grateful to hear from you in that regard."
5.	The insurers nominated solicitors, Lamport Bassitt, to accept service, and in March 1997 the writ was served.  Those solicitors granted an extension of time for service of the statement of claim, which was served on 11th April 1997.  The Second Defendant’s solicitors then sought and obtained an extension of time for service of the defence, and it was served on 12th May 1997.  The matter continued to proceed towards trial in the normal way.  The Claimant’s solicitors served their schedule of special damage, there were many exchanges in relation to discovery, the Claimant’s solicitors granted authority for the Claimant’s medical records to be released to the Defendant’s medical experts, and medical examinations were then arranged.
Emergence of section 152 issue
6.	Then suddenly, in June 1999, the Second Defendant’s solicitors changed tack.  We have been told, and I see no reason to doubt, that the reason was that they had received advice from Mr Snell, who had just been instructed as counsel on their behalf.  They woke up to the possibility of relying on section 152(1) of the 1988 Act.  In a witness statement dated 9th June 1999 Susan Brain, a legal executive employed by Lamport Bassitt, says that she has the conduct of the action on behalf of the insurers and the First Defendant.  In paragraph 7 she says that the failure of the Claimant to give the notice required by section 152(1) “has only recently come to the attention of insurers”.  On the other hand it is undeniable from the history set out above that the insurers had full knowledge of all relevant facts from February 1997 onwards.  Miss Brain’s statement was made in support of an application by Derek Wylie to be joined as a Second Defendant in the action, to have leave to amend the defence, and an application for an order that the Second Defendant’s claim for declaratory relief be tried as a preliminary issue.  We are informed by Mr Dermod O’Brien QC, who has appeared for the Second Defendant before us, that the procedure adopted in this case is the procedure normally and sensibly adopted where an issue arises as to the contingent liability of an insurer pursuant to section 151 and section 152 of the 1988 Act.  I say contingent because of course there can be no liability to satisfy a judgment until the judgment is obtained against the First Defendant, but it is obviously helpful for everyone to know at an early stage if the insurers will satisfy the judgment if the Claimant is successful.  Mr Wylie’s application was not opposed, and by an order made on 4th November 1999 he became Second Defendant in the action.  In his defence, served on 18th November 1999, he asserted that the Claimant failed to give notice as required by section 152(1)(a) of the 1988 Act, and by way of counterclaim sought the declaration to which I have already referred.
If Estoppel is raised
7.	In his undated Reply counsel for the Claimant joined issue with the Second Defendant on his defence, and averred that the Second Defendant is estopped from relying on the lack of notice by reason of the history of the litigation, which included an oral offer of settlement in the sum of £50,000 allegedly made on 8th August 1997 in a telephone conversation confirmed by an open letter dated 18th November 1997.
8.	Arrangements were then made for the application for a declaration to be heard as a preliminary issue, and thus the matter came before Judge Thompson earlier this year.  
Issues
9.	There are thus two issues to be considered - first whether the insurer “had notice of the bringing of the proceedings” for the purposes of section 152(1)(a) of the 1988 Act, and if not, secondly, whether the Second Defendant is estopped from raising that issue by reason of the matters referred to in the Reply.  
First Issue - authorities
10.	A provision similar to that set out in section 152(1)(a) has existed in road traffic legislation since at least 1934, so there are now a number of authorities as to what the words mean.  
11.	The first in time is the decision of Porter J in Herbert v Railway Passenger Assurance Company [1938] 60 Ll.R. 143.  There the statutory provision under consideration was section 10(2) of the Road Traffic Act 1934 which read -
"No sum shall be payable by an insurer under the foregoing provisions of this section -
(a) in respect of any judgment, unless before or within seven days after the commencement of the proceedings in which the judgment was given, the insurer had notice of the bringing of the proceedings."
12.	A man named Wilkinson had insured his motor cycle combination through a fellow employee named Ackery who acted as agent to place business with an insurance company.  Subsequently in the course of casual conversation Wilkinson mentioned that an action had been brought against him.  The judge could see no reason why Ackery should regard Wilkinson’s statement as a matter he ought to pass on to the insurance company,  so the company was found not to have had notice of the bringing of the proceedings.  The judgment contains indications that notice needs to be given, and that some degree of formality is required, but those indications are obiter, and in the light of later decisions they can be disregarded. 
13.	In Weldrick v Essex & Suffolk Equitable Insurance Society Ltd [1950] 83 Ll.R. 91 Birkett J was concerned with the same statutory provision.  Nine months before the writ was issued the plaintiff’s solicitors wrote to the insurers concerned as follows -
"We understand your Society has repudiated liability, and we shall be grateful to have your confirmation thereof in writing, because you will appreciate, we shall have to take proceedings against Mohamed, and as against the owner of the other vehicle, and at the same time give notice to the Motor Insurers Bureau of your repudiation of liability."
14.	The insurers gave confirmation as requested, and the judge said -
"It is very difficult to resist the view that the defendants in those circumstances knew that proceedings would almost inevitably be brought, but I am afraid I cannot quite decide it like that."
15.	Then, having referred to Herbert’s case the judge found the solicitor’s letter to be insufficient notice for the purposes of section 10(2) saying -
"What they (the insurers) did have was an intimation that in certain circumstances proceedings might be brought, but not necessarily that they would be brought."
16.	In the light of later authorities I doubt if that decision can stand.  Certainly it should be regarded as peculiar to its own facts.
17.	In Ceylon Motor Insurance Association Ltd v Thambugala [1953] AC 584 the Privy Council considered section 134 of the Motor Car Ordinance 1938 of Ceylon, the terms of which read -
"No sum shall be payable by an insurer under the provisions of section 133 - (a) in respect of any decree, unless before or within seven days after the commencement of the action in which the decree was entered, notice of the action had been given to the insurer by a party to the action...."
18.	In that case the letter before action which was sent to the insurers on 21st May 1946 said -
"Re car X-4851.  We are instructed by (the Claimant) to file an action for the recovery of Rs 1500 against (the proposed defendant) being damages sustained by our client as the result of the above car knocking down our client on September 1 1945, by reason of the negligence and careless driving on the part of his driver.  We are given to understand that the above car has been insured with your company.  Our client is still under treatment and unless our clients claim is settled on or before the 31st instant, we are instructed to file action against the owner of the car." 
19.	That letter was held to be sufficient notice for the purposes of section 134 despite the qualification.  Mr De Silva giving the opinion of the Board, which included Lord Porter (formerly Porter J) said at 593 -
"An action cannot be specified with precision without reference to its number and the name of the court in which it is filed.  It is to be noticed, however, that section 134 contemplates the possibility of giving notice before the action is filed.  In that event no number can be given.  It follows that the section contemplates something containing less than a precise specification of the action  .....then it was said that the words ‘unless our client’s claim is settled’ reduced the notice to one which was conditional and insufficent for the purposes of section 134 .....  A notice of action without such words necessarily carries with it the implication that action will be filed only if the claim is not settled, and the addition of the express statement doers not alter its meaning or it effect."
20.	I mention the next case McGoona v MIB [1969] Ll.R. 34 in passing, noting that what was said there by Lawton J about this branch of the law was obiter.  The case was decided on other grounds.  The relevant section was section 207(2) of the Road Traffic Act 1960, which re-enacted verbatim section 10(2) of the 1934 Act.  At page 46 Lawton J said -
"The wording of sub-clause (a) is clear, say the insurers; what is required is a notice before or within 7 days after the commencement of the proceedings in which judgment was given.  Now, ‘proceedings’ in that sub-clause, in my judgment, must mean the beginning of legal proceedings.  Notification that a claim may be made is not notification of the commencement of proceedings and there is obviously good reason why the commencement of the proceedings is the material time.  Insurers may have repudiated liability as against their assured but they may have their own reasons for taking over control of any litigation there may be."
21.	Mr O’Brien drew our attention to that passage because it highlights for the first time in the decided cases the difference between notification of a claim and notification of proceedings.  
22.	In Harrington v Pinkey [1989] 2 Ll.R. 310 section 149(2) of the Road Traffic Act 1972, which again reproduced the wording of section 10(2) of the 1934 Act, was directly in issue.  Six months before the writ was issued the plaintiff’s solicitors wrote to the insurers saying -
"It seems to us that liability cannot be an issue in this matter and unless, therefore, you are able to confirm to us within the next fourteen days that an accident report has been received and that you will be dealing with the matter on a full liability basis, we will advise our client to institute proceedings against your insured without further reference to you."
23.	The judge at first instance held that to have been sufficient notice for the purposes of section 149(2), but this court (Woolf LJ and Sir Denys Buckley), having considered all four earlier authorities to which I have referred, disagreed.  Woolf LJ said at 315 that he regarded the letter -
"As being notice that the plaintiff’s solicitors would advise their clients to institute proceedings against the insured, not that the proceedings were to be instituted."
24.	Sir Denys Buckley agreed, but emphasised that the notice need not be written, and could come from another source.  As Woolf LJ said at 312 “what is required is not notice of the claim but notice of the bringing of the proceedings.”
25.	The only other decision which it is necessary to cite in relation to this aspect of the matter is Desouza v Waterlow [1999] RTR 71, another decision of this court, consisting on this occasion of Roch LJ and Cazalet J.  The statutory provision under consideration was the one with which we are concerned, and the material facts were that the insurers could not get the co-operation of Dr Bayley, their insured, in response to the plaintiff’s claim.  On 10th December 1990 they wrote to the brokers pressing them to secure the necessary co-operation and saying “Mr R Desouza is threatening legal proceedings”.  On 1st January 1991 the plaintiff wrote to Dr Bayley with a copy to her insurers, warning her of his intention to sue if his claim was not met.  An important sentence reads -
"My solicitor will be contacting you and your insurers shortly informing you both of his instructions to summons you to court."
26.	On 24th April 1991 the plaintiff wrote to the insurers saying -
"I note that within your letter you confirm receipt of my letter of January 1, 1991 to your insured, effectively informing your insured of my intention to take these matters to court in arriving at the appropriate resolution and conclusion of my claim".
27.	Then, on 30th April 1991, he telephoned the insurers telling them that he “now intended to commence legal proceedings against their insured through the High Court”.  According to his memorandum of that conversation he was encouraged by the insurers to proceed in order to encourage Dr Bayley to co-operate.  The writ was issued on 14th May 1991, he got judgment in default, and it was only in 1995, when the plaintiff was attempting to enforce his judgment against the insurers, that they alleged non-compliance with section 152(1).  At first instance the judge found in their favour, and expressed doubts as to whether the letter of 24th April 1991 was written and the telephone call of 30th April 1991 was made, but, as the Court of Appeal found, the evidence was all one way so, although there was no citation of the authorities to which I have referred, it is not surprising to find that the plaintiff was successful on appeal.  Cazalet J said at page 81 -
""In my view, notice in any particular case is a matter of fact and degree and will turn on the extent to which the insurer has been made aware of the background circumstances and of the position of the claimant in regard to the taking of proceedings.  Such notice can be given orally or in writing.  The essential purpose of the requirement of notice is that the insurer is not met with information, out of the blue, that its insured has had a judgment obtained against him.  ... It seems to me that by stating his position as he did in those communications the plaintiff made wholly clear the course which he was proposing to take." -"
28.	At page 82 Roch LJ said --
"The insurers, through their counsel Mr Astor, argue that the interpretation of section 152(1)(a) turns on the use of the word ‘the’ in front of the word ‘proceedings’, and therefore what has to be given by way of notice to the insurers is notice of the particular proceedings brought by the third party.  In my judgment, the sub-section is not to be interpreted in that way.  As notice of the bringing of proceedings can be given before those proceedings are commenced, that is to say at a time when the proceedings do not exist, the notice that has to be given to the insurers is information that the third party intends to commence an action against the insurers insured.  Once the insurers have had that knowledge there is an onus on them to inform themselves of the precise details of the proceedings."
Conclusions from Authorities
29.	Pausing there, it seems to me that certain conclusions can be drawn from the authorities.
(1) To show that the insured had notice of the bringing of the proceedings there must be more than evidence of a casual comment to someone who at times acted as an agent for the insurers (see Herbert v RPA Company).
(2) Any notification relied upon must not be subject to a condition which may or may not be fulfilled (see Weldrick and Harrington) but if the only condition is one which requires action from the recipients which they choose not to take then by making that choice they render the notice unconditional and thus effective (see Ceylon Motor Insurance Association Ltd ).
(3) The notice can be oral, and it need not even emanate from the claimant (see Harrington and Desouza).  It can be given before proceedings have commenced, and it need not be specific as to the nature of the proceedings, (Desouza) or the court (see Ceylon and Harrington). .
(4) Whether in any given case it is shown that the insurer had notice of the bringing of the proceedings (as opposed to the making of a claim) is a matter of fact and degree (Desouza). 
(5) The essential purpose of the requirement of notice is to ensure that the insurer is not suddenly faced with a judgment which he has to satisfy without having any opportunity to take part in the proceedings in which that judgement was obtained (Desouza).
Judge’s conclusions on First Issue
30.	In the present case Judge Thompson, having looked at the authorities, concluded that the two decisions of this court are in conflict.  That is a conclusion which, for the reasons I have tried to explain, I do not share.  In Harrington the notice was plainly conditional.  The insurers had no means of knowing whether or not the solicitors’ advice would be accepted.  In Desouza  the plaintiff, acting in person, told the insurers that he intended to commence legal proceedings and was encouraged to do so.  
31.	Having considered the statutory words the judge concluded that the insurers did receive adequate notice of the intention to bring the proceedings.  He referred in particular to the letter of claim of 26th June 1995, which was commendably full, but I regret to say that I cannot share the judge’s view that it constituted “notice of the bringing of the proceedings”.  At page 12H of the transcript the judge said -
"I think it is pure casuistry to say that in those circumstances the insurers have not had notice that a legal claim is being made.  Whether you call it a legal claim, or proceedings, it seems to me to be a distinction without a difference."
32.	It is not a distinction without a difference, as was made clear by Lawton J in McGoona and by Woolf LJ in Harrington.  The judge clearly thought that by holding as he did he was following the decision in Desouza, but he was not.  Of course I accept, as the judge pointed out, that here the object of section 152(1) was satisfied.  The insurers were kept in the picture from the start, and were never in danger of being faced with a judgment which they had to satisfy without having had an opportunity to take part in the proceedings, but that does not of itself entitle the claimant or the court to ignore the statutory requirement whi ch makes it a condition precedent to liability that “before or within 7 days after the commencement of the proceedings ... the insurer had notice of the bringing of the proceedings”.  As Mr O’Brien pointed out, a significant feature of the present case is the fact that the statutory period of limitation expired on 29th December 1996.  For months prior to that date, and for about five weeks thereafter, the claimant’s solicitors were not in contact with the insurers at all.  There may well be other cases in which contact,. even an informal contact, shortly before the commencement of proceedings would put the insurer in the position of having notice of the bringing of the proceedings - everything would depend on the facts of the case, but a prudent solicitor would be well advised to ensure that the insurer received written notice within 7 days after the commencement of proceedings.  There can then be no room for argument.
The Second Issue - Estoppel or waiver
33.	Mr Valios QC, for the claimant, submitted that having regard to the experience of the insurers in the field we can infer that they were at all material times aware of the provisions of section 152(1)(a), and simply decided not to take any point until June 1999.  I see no reason to accept that submission.  As I have already said, it seems clear to me that the possibility of relying on section 152(1)(a) was simply overlooked by the insurers until they had the benefit of advice from Mr Snell, but even if I am wrong about that it does not affect my conclusion in relation to this aspect of the case.  
34.	Mr Valios went on to submit that a litigant entitled to the benefit of a statutory defence can waive that entitlement.  I agree, but section 152(1)(a) is not a statutory defence, it is a condition precedent to liability. 
35.	Our attention was then invited to 2 passages in Halsbury’s Laws of England (Fourth Edition) the first being paragraph 922 in Volume 16 where it says amongst other things -
"A person who is entitled to rely on a stipulation, existing for his benefit alone, in a contract or of a statutory provision, may waive it, and allow the contract or transaction to proceed as though the stipulation or provision did not exist.  Waiver of this kind depends upon consent; and the fact that the other party has acted on it is sufficient consideration."
36.	The other passage, at paragraph 1364 in Volume 44(1) is to the same effect -
"Persons for whose benefit statutory duties have been imposed may waive their right to the performance of duties, unless to do so would be contrary to public policy or to the provisions or policy of the Act imposing the particular duty, or the duties are imposed in the public interest.  Waiver of this kind may be implied from acquiescence.  In some cases, and in particular where an act bars a legal remedy without extinguishing a right, the courts treat mere failure to plead the Act as acquiescence.   "
37.	In support of those general propositions Mr Valios invited us to consider three authorities.  The first was Kammins Ballrooms Company Ltd v Zenith Investments (Torquay) Limited [1971] AC 850, a landlord and tenant case.  The statute contained provisions as to when applications for new tenancies could be made, and there was a failure to comply with those provisions.  Lord Reid said at 860F that the parties were free to contract out, and similarly Lord Morris said at 862F -
"If someone has an existing claim for money due or for damages he may be met by a plea that some statute has enacted that an action to enforce his claim must be brought within a certain period.  Yet is has always been recognised that words such as ‘no action shall be brought’ are generally speaking not words which compel the court to hold that it lacks jurisdiction even if the party sued does not wish to rely on the statutory defence.  The position is in my view similar in the case of a tenant who makes an application to the court for a new tenancy.  He may be defeated if he has not applied within the statutory time limits.  But if the landlord chooses not to insist upon a strict compliance with those limits I do not consider that the court is devoid of jurisdiction."
38.	Of course the present case is somewhat different in that we are considering not a statutory time limit, but a state of affairs which by statute had to exist before the relevant insurers became liable to pay.
39.	In Heron Garage Properties Ltd v Moss [1974] 1 WLR 148 the contract for the sale of land was conditional on obtaining planning permission.  It was not granted.  The purchaser sought to enforce the contract, but failed.  Brightman J said at 153E -
"The Town Planning consent is expressed in clause 7 of the sale agreement as a condition fundamental to the enforceability of the sale agreement as a whole.  It is not expressed as a condition which is precedent only to the liability of the purchaser.  Clause 7 is not a clause which is expressed only to confer rights on Heron.  It is expressed to confer a right also on the vendors."
40.	That, as Laws LJ pointed out during the course of argument, throws one back to the question of what, in the present case, is the proper construction of the statute.  Is section 152(1)(a) merely procedural, or is it more fundamental than that?
41.	The final authority which we were asked to consider was the Scottish case of McBlain v Dolan [1998] SLT 512, a decision of Lord Johnston in the Outer House.  The facts had some similarity to those in the present case, but the judge was not trying the action.  He was only dealing with the time at which the issues in relation to section 151 and section 152 should be considered, and his procedural decision seems to me to be of limited assistance in this case.
42.	That decision does however highlight a fundamental problem which the claimant faces in this case.  He cannot point to any representation which might give rise to an equitable estoppel, and his section 151 right to recover from the insurers was conditional on his obtaining judgment against the First Defendant.  By section 151(5)(a) the insurer was bound to pay “any sum payable under the judgment”.  The insurers were therefore entitled to defend the action on behalf of the First Defendant right up to judgment, and then, when the judgment was entered and the claimant turned to them to recover pursuant to section 151, to raise for the first time the section 152(1)(a) notice point.  That would not be attractive, but it would be legal, and that was how in McBlain’s case it seems to have been envisaged that the action might proceed.  Once that possibility is recognised it becomes obvious that nothing which the insurers or their solicitors did or failed to do in the present case prior to June 1999, whilst acting on behalf of the First Defendant, can be regarded as waiving the right of the insurers to take any point they might consider appropriate in answer to a future claim against them under section 151 should such a claim be made.  It follows in my judgment that on the facts there is not room for an argument of waiver or estoppel and such arguments cannot therefore succeed.
Conclusion
43.	I would therefore allow the appeal and make the declaration sought.  I confess that I reached that conclusion with reluctance because the insurers and their solicitors should have been alive to section 152, and if they were to take the point which they eventually took in June 1999 they should have taken it in February 1997, but the unattractiveness of their behaviour cannot be determinative of the outcome of the case. 
Lord Justice Laws:	I agree.
Lord Justice Rix:	I also agree.

Order:	Appeal allowed with the costs including leading Counsel.  Each side to pay their costs below.

(This order does not form part of approved judgment)